The difference between the public’s expectations of auditors and their real duties and skills is known as the audit expectations gap, and it exists both in the UK and internationally (Deumes and Carchon 2019; Free and Verona 2018). Several things cause this gap, and different jurisdictions may experience it differently. The audit expectations gap has drawn attention and discussion in the UK (Humphrey and Owen 2018). One reason contributing to this gap is the misconception that auditors are tasked with finding all fraud or mistakes in financial statements (Deumes and Carchon 2019). Although they cannot guarantee the discovery of every case of fraud or error, auditors are primarily responsible for giving reasonable assurance over the absence of substantial misstatements.

The media’s representation of audit failures and the complexity of financial reporting requirements are two variables that impact the audit expectations gap globally (Free and Verona, 2018). The function of an auditor is frequently overstated in the public’s perception, which breeds irrational expectations and criticism of the auditing profession. By improving public awareness of the audit process and outlining the roles and duties of auditors, efforts have been undertaken to close the expectations gap (Deumes and Carchon 2019). To inform stakeholders about the constraints of the audit function, regulatory agencies and professional organizations have released guidelines and launched public awareness campaigns. Additionally, there are continuing talks about prospective changes, such as improved auditor openness and extended reporting obligations (Humphrey and Owen, 2018).

Recent Developments Concerning This Gap

Aiming to close the audit expectations gap and increase public confidence in the auditing profession, recent advancements. These changes, which have taken place domestically and internationally, reflect continued efforts to close the gap and match public expectations with the actual function of auditors. In order to improve the audit profession and close the expectations gap, considerable reforms are required in the UK, according to Sir John Kingman’s Independent Review of the Financial Reporting Council (FRC) in 2018 (Kingman 2018). The study recommended the Audit, Reporting, and Governance Authority (ARGA), a new regulatory agency with expanded authority and responsibility for regulating the audit profession.

Another development is the Audit, Reporting, and Governance (ARG) Act, which the UK government passed in 2020 and included several measures to address the expectations gap (UK Parliament 2020). Some of these measures include increased auditor accountability, enhanced audit reporting transparency, and more powerful enforcement tools. In order to improve audit quality and close the expectations gap, the International Auditing and Assurance Standards Board (IAASB) has been actively working on projects worldwide (IAASB 2021). The IAASB has released updated guidelines for auditing, highlighting the need for auditors to properly explain major audit items in their reports to improve transparency and provide consumers of financial statements with more information.

In addition, the International Ethics Standards Board for Accountants (IESBA) amended its Code of Ethics for Professional Accountants to highlight the value of professional independence and scepticism (IESBA 2021). These revisions are intended to clarify the duties of auditors and allay worries about the expectations gap. These recent events serve as a reminder of the continuous work being done to reduce the audit expectations gap and strengthen the audit profession. Stakeholders work to match public expectations with auditors’ real function and constraints by putting reforms into place, stepping up regulatory monitoring, and encouraging openness and communication.